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BP Fights 'Feeding Frenzy' of US Oil Spill Claims

WASHINGTON -- BP (IW 1000/4) asked a U.S. appeals court on Monday to scuttle a "feeding frenzy" of "fictitious" compensation claims stemming from the 2010 Gulf of Mexico oil spill.

The British energy giant reached a $7.8 billion settlement last year with thousands of people and businesses hit by the worst environmental disaster in U.S. history.

It warned that sum won't be enough to pay all the claims if the court-appointed administrator of the settlement continues to award "excessive and unwarranted" compensation to claimants.

At issue is how the administrator accounts for lost revenues and whether claimants should be allowed to pick and choose which periods to use as a benchmark.

"Not only is the claims administrator's misinterpretation contrary to the plain language of the settlement agreement and the intent of the parties, but it has ignited a feeding frenzy among trial lawyers attempting to secure money for themselves and their clients that neither deserves," Geoff Morrell, BP's head of U.S. communications, said in a statement.

"We are asking the Fifth Circuit to follow established legal principles of contract law and interpret the agreement as written and intended: paying only those claimants who suffered actual losses."

Oil Firm Notes Fortuitous Timing

In a brief filed before oral arguments were held Monday, BP argued that more than two-thirds of large claims were based on "fortuitously timed" accounting rather than actual lost profits.

It cited a number of cases in which businesses that saw their profits rise the year of the spill nonetheless got big payouts, such as $21 million awarded to a rice mill in Louisiana and $9.7 million awarded to a construction company in northern Alabama that didn't even do business on the coast.

Altogether, BP said the "improper" awards already amount to hundreds of millions of dollars and "could easily climb into the billions."

BP's request to reinterpret the rules was initially rejected by the federal judge overseeing the thousands of lawsuits filed in the wake of the deadly explosion aboard the Deepwater Horizon drilling rig.

The appeals court gave no indication of when it will rule on the matter.

It took 87 days to cap BP's runaway well. The disaster killed 11 workers, blackened beaches in five states and crippled the region's tourism and fishing industries in a tragedy that riveted the United States.

BP spent more than $14 billion on the response and cleanup and has paid another $10 billion to businesses, individuals and local governments that did not join the class action lawsuit.